Saudi Economy Hits $1.31 Trillion but Slowdown Looms as Vision Targets Slip

Saudi Arabia’s real GDP climbed to $1.31 trillion in 2025, with non-oil sectors now contributing 55 per cent of output, the National Transformation Program’s annual report showed. Foreign direct investment surged to $35.5 billion, nearly five times the 2017 level, as more than 700 firms established regional headquarters in the kingdom. Yet beneath the headline figures, the trajectory is already shifting. First-quarter data for 2026, released by the General Authority for Statistics, reveal that annual growth decelerated to 3 per cent, the slowest pace in six quarters. Oil activities contracted 6.8 per cent on a sequential basis as OPEC+ production adjustments began to bite, while non-oil expansion, at 2.9 per cent year-on-year, lost momentum. Viewed from Riyadh, the milestone masks mounting headwinds.

Progress towards the Vision 2030 targets also shows strain. The Public Investment Fund’s assets under management reached $910 billion, well short of the $1.09 trillion goal, and real non-oil GDP of $892 billion fell below the intended $904 billion. Foreign direct investment represented only 2.8 per cent of GDP against a 3.4 per cent objective. Still, on the ground, the hospitality sector offers a glimmer: hotel occupancy in Madinah hit 75 per cent in 2025, a three-year high, reflecting sustained Umrah demand. The Moroccan economy, meanwhile, expanded by an identical 4.9 per cent in 2025, but analysts in Rabat caution that the expansion was overwhelmingly driven by public investment, particularly in major infrastructure, while household consumption remained subdued and non-agricultural private activity slowed. Morocco’s tourism receipts climbed to $14.8 billion as the country welcomed 19.8 million visitors and rose to twenty-second in global arrivals, yet the growth model’s reliance on state stimulus prompts unease.

South Africa’s economy added 0.5 per cent quarter-on-quarter in early 2026, marginally exceeding forecasts, with nine of ten sectors growing and finance leading the way. However, manufacturing contracted and fixed investment declined after two quarters of expansion. Officials in Pretoria warn that the economic fallout from the Iran war has yet to register in the data. Across Saudi Arabia, Morocco and South Africa, the common thread is an expansion still heavily steered by public hands or vulnerable to external shocks. For the kingdom, the real test of its post-oil transformation will be whether private-sector momentum can compensate as fiscal levers recede and geopolitical clouds gather.